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City of Palo Alto (ID # 3217)
Policy and Services Committee Staff Report
Report Type: Meeting Date: 10/23/2012
City of Palo Alto Page 1
Summary Title: Economic Development Policy
Title: Recommendation on Economic Development Policy and Input on
Outreach and Development Process for Update of Comprehensive Plan
Business and Economics Element
From: City Manager
Lead Department: City Manager
Recommendation
1. Staff recommends that the Policy and Services Committee recommend that Council adopt
the Economic Development Policy included as Attachment A.
2. Staff recommends that the Policy and Services Committee review the attached Stakeholders
questionnaire (Attachment B) and provide feedback in regards to the questions as they
relate to the update of the Business and Economics element of the City’s Comprehensive
Plan.
Background
In March 2011, the Economic Development Manager presented a draft Economic Development
Strategic Plan to the Policy & Services Committee for discussion and direction. After returning
in June 2011 with updates, staff met with Policy & Services again in October of 2011 and
presented a draft of two separate documents: the first being a Council Policy for Economic
Development, and the second being a Staff Action Plan relating to the policy. In response to
Committee Member comments, staff returned in November of 2011 with a further revision to
these two documents.
The intended purpose of the Council policy is to set forth the goals and guiding principles for
the providing the policy framework to ensure that the the City Manager can direct that staff
and financial resources for economic development are applied in the most effective manner.
City of Palo Alto Page 2
The Staff Action Plan identified strategic areas of focus that align with the goals of the Economic
Development Policy. While staff action plans aren’t typically referred to Committee/ Council for
review, staff believed that at that stage of early policy formulation the staff action plan served
as an indicator of staff’s interpretation of the City’s goals for Economic Development and would
help the Committee/ Council indicate whether or not we were “on track”. After further
dialogue, staff was asked to include Committee Member’s comments and return for further
discussion of the Policy.
The purpose of the Council policy is to set forth the goals and the guiding principles of
economic development for the City government and provide the policy framework to ensure
that the City’s limited resources are applied in the most effective manner.
Meanwhile, staff continues work to update the various elements of the City’s Comprehensive
Plan. In early 2012, a committee was formed to address the Business and Economics element,
including Planning Department Staff and the Economic Development Manager, with input from
a Planning and Transportation subcommittee. At early meetings, it became clear that much of
this work is connected to and parallel with staff’s efforts in regards to an Economic
Development policy. It also became clear that the existing element, policies, and goals needed
a great deal of updating to be in line with the current economic environment.
Discussion
Staff believes that the attached Policy on Economic Development as well as feedback on the
attached questionnaire will help to clarify the City’s goals and guiding principles for economic
development. As such, it will also help to provide a framework for the Comprehensive Plan
Business and Economics Sub- Committee’s work on updating the Comprehensive Plan’s
business and economics element. By holding several focused stakeholder meetings, as well as
Planning & Transportation and City Council meetings dedicated to the Business & Economics
element, staff believes that we will obtain the community input necessary to effectively inform
the Comprehensive Plan policies and goals.
Timeline
The proposed timeline to bring the Economic Development Policy to the City Council is in
November. In regards to the Comprehensive Plan Business & Economics Element, the first
community stakeholder meeting is being scheduled for late October, with subsequent meetings
taking place in November and December. The committee is targeting January 2013 to bring
forward a draft update to the Planning & Transportation Commission, and early 2013 for
adoption by the City Council.
Attachments:
City of Palo Alto Page 3
Attachment A: Econ Dev Policy Draft 10-23-12 (DOCX)
Attachment B: Twelve Questions to Business Stakeholders (DOC)
Attachment C: Excerpt from Policy and Services Meeting March 8, 2011 (PDF)
Attachment D: Excerpt from Policy and Services Meeting on June 14, 2011 (PDF)
Attachment E: Excerpt Minutes from Policy & Services meeting on Oct 18, 2011 (PDF)
Attachment F: Excerpt from Policy and Services Meeting on Nov 29, 2011 (PDF)
Purpose
This Council policy sets for the goals and guiding principles for the City of Palo Alto’s Economic
Development efforts.
Background
The City of Palo Alto has a reputation as a world leader of technology and innovation as well as a major
employment center for our region. Thousands of companies are located here, delivering a wide range of
products and services from technologies to community-serving businesses. Through the payment of
various taxes, many of these companies directly contribute to the delivery of needed services and
infrastructure in our city. There are also numerous secondary and tertiary financial benefits (i.e.
transient occupancy tax (TOT) generated from business trips, sales tax generated from business lunches,
etc.) Our primary economic development goal should focus on supporting and attracting the businesses
that support and grow our tax base, with an understanding that other City values and policies may also
come into play.
Significant contributors to our position as a major employment center are our great local schools,
adjacency to the talented people and institutions such as Stanford University, Medical Center and Lucille
Packard Children’s Hospital, strong neighborhoods (many with historic qualities), access to transit,
temperate climate, beautiful tree canopy, diverse and highly educated populace, interesting and walk-
able business districts, City ownership of the suite of utilities including fiber optics, strong cultural
amenities including community services, performance and visual arts, access to parks and open space,
and good government.
But the City also faces numerous challenges. The disconnect between economic growth, local
government tax structure, and state/ federal revenue challenges continue to complicate the flow of
funds to support the delivery of services and City infrastructure. In some cases, this limits the ability of
the City to financially benefit from its thriving businesses. A number of other fundamental forces and
factors which impact our community must be considered as part of the City’s economic development
strategy. These include: managing growing employment demand; increasing access to public transit and
its effectiveness; limits to available commercial properties; affordable housing; the City’s aging
infrastructure; traffic and parking congestion, transitioning to low a carbon economy; population growth
anticipated in young families and seniors into the next decade; and maintaining high quality schools.
These challenges require balancing economic development goals and community values.
City of Palo Alto
Economic Development Policy
October 23, 2012
Our limited Economic Development staff is taking a more proactive role in supporting the attraction of
new business to town, while helping to retain and grow existing enterprises. Staff focus is on
understanding and meeting the needs of revenue-generating companies (i.e. retail, hotel, business-to-
business, etc) which help to fund vital city services. By serving as an advocate where appropriate with
other City departments such as the Development Services, Planning, Fire, and Utilities, we will work to
attract the best fit companies for Palo Alto by making processes transparent and predictable.
Our Economic Development vernacular also champions the innovative spirit of our businesses and
community to show our commitment to maintaining our leadership position as a global center for
innovation and a place to launch new ideas and businesses. Some companies in the “innovation” space
provide little direct benefit (i.e. taxable sales, etc) to the City’s general fund. In order to continue to be
competitive on a global scale, however, Palo Alto must remain a place where people’s creative ideas are
more likely to become world-renowned businesses. The City’s economic development is maintained in
the long-run by fostering the network of public and private resources that support the innovation
economy, while growing direct and indirect revenues for the general fund.
Several industries merit focus in this “innovation” space. For instance, with the expansion of the
Stanford Medical Center and Lucille Packard Children’s Hospital, the City is well poised to attract and
grow in the areas of biotech, and other health and healthcare-related start-ups. Another great example
is in the area of Clean Tech, where Palo Alto is an emerging leader in the Electric and Smart Vehicle
design and engineering.
Policy Statement for Economic Development
It is the Policy of the City to create an environment that attracts new businesses, and retains and
encourages growth of existing businesses that: 1) provide revenues to support the delivery of services
and infrastructure for the City and/or; 2) ensure that Palo Alto continues to be a global center of
technology and innovation. The City government will be guided by:
Guiding Principles
1. Key resources and assets attract and keep businesses in line with Palo Alto values while providing
needed revenue to the City.
2. Sustainability and economic development are complimentary.
3. Fostering innovation and creativity will maintain Palo Alto’s attractiveness for existing and potential
businesses.
4. Palo Alto’s economy is sustained through a diverse mix of existing and emerging industries.
5. Local-serving businesses are an integral part of the overall community in Palo Alto.
6. Small businesses and emerging start-ups have an important role in the creation of jobs and
economic growth.
7. Collaborative efforts are essential to foster innovation for economic impact, especially with Stanford
University and Stanford Medical Center.
TWELVE QUESTIONS TO BUSINESS STAKEHOLDERS
1. Why is Palo Alto a desirable place to do Business? (What is our competitive
edge? But also, what are the drawbacks and deterrents?)
2. What more could we do to retain growing businesses?
3. In what areas do you see business growth in Palo Alto?
4. Where should we focus more attention in improving our Business Centers, such
as Downtown, Stanford Research Park, Midtown, California Avenue, and El
Camino Real?
5. What would make Downtown even better?
6. How do we build closer ties with Stanford in supporting the local economy and
our businesses?
7. Do you support housing Downtown [and California Avenue] as a pro-business
model?
8. The City's demographics are changing. How do you see that affecting business?
9. What would improve business along El Camino Real?
10. The City is writing a new Business & Economics Element of its Comprehensive
Plan. Where would you place its emphasis? What are the most important
priorities?
11. Do you think the “Palo Alto Process” should be changed or improved; and, if so,
how?
12. What measures should be considered to create appropriate housing options to
address future needs?
P&S 3-8-11.doc 1
POLICY AND SERVICES COMMITTEE
Regular Meeting
March 8, 2011
I. Roll Call
Chairperson Price called the meeting to order at 7:03 p.m. in the Council
Conference Room, 250 Hamilton Avenue, Palo Alto, California.
Present: Burt, Holman, Price (chair)
Absent: Klein
II. Oral Communications
None
III. Agenda Items
1. Review and Recommendation on Economic Development Strategic Plan
Manager of Economic Development Thomas Fehrenbach said he was
unveiling the draft of the Economic Development Plan. He said Staff’s
goal with the Economic Development Plan was to be proactive in
attracting new businesses while retaining and growing existing
businesses. Innovation was a key component as Palo Alto was a city that
attracted many start up technology businesses. He said there was a
nexus between the innovation that has made Palo Alto a global center,
the array of resources available, and the tax generating businesses in the
City. He discussed the formation of new partnerships with the
community and across departments within the organization. He listed
four major categories of deliverables:
Communication/Outreach/Information Flow, Development Center
Experience, Community Partnerships, and the Bottom Line. He said the
bottom-line was that they needed to focus on the items they had
influence on. They will report the outcomes to the City Council.
P&S 3-8-11.doc 2
Mr. Keene said the Economic Development Plan fit into the City Finances
category of the Council Priorities. He said that this was a starting point to
find the focus for Economic Development. Staff was hoping to receive
comments from the Committee. Staff was concerned about generating a
revenue stream that would help the City. There was also value in
business vitality beyond sales tax revenue with quality of life.
Council Member Holman spoke regarding the role development will have
in this plan. She said there were impacts to many future programs. She
referred to the Ten Myths of Successful Downtowns which state that a
community can differentiate itself through diverse and unique retail. She
stated that Staff’s description of downtown Palo Alto sounded flat. She
spoke regarding a proliferation of restaurants on University Avenue and
the trend toward it on California Avenue. She wanted the focus to shift
toward a local, independent business structure. Businesses should be
recognized more by Council. She questioned the economic benefit of
companies that Staff refers to as keeping the character and charm of Palo
Alto.
Mr. Keene said that economic development may not be the right term for
this concept. He said it was more in reference to quality of life perhaps
than a hierarchy of business types.
Mr. Fehrenbach said there were induced benefits to these types of
businesses even though they do not generate a high level of sales tax
revenue. He said that a major business attractor was innovation which
was difficult to put a quantitative value on.
Council Member Holman reiterated that they may not be focused on the
right topic to the right degree. She wanted to understand how they
would achieve balance between the types of businesses. She discussed
the land-use component of the plan. She wanted to know some
examples of land-use and transportation with regards to thoughtful
progression.
Mr. Fehrenbach said one example would be making sure the economic
development perspective was brought to the table when discussing items
such as land-use changes. The City should advocate for the taxable
base. Sustainability and Economic Development do not need to be
mutually excludable. He clarified that the Developmental Processes were
about the Development Center changes.
Council Member Holman asked if they would get another chance to
P&S 3-8-11.doc 3
improve the ground floor development around the City.
Mr. Keene said the plan was still conceptual and intended only to
recognize that economic development should integrate with the
Comprehensive Plan and the Land-Use and Zoning plans; they should all
be aligned. The nature of retail changes on a regular basis and the plans
and zoning processes should be aligned to what is in the best interests
for the City.
Council Member Burt said that it should potentially not be called the
Economic Development Plan. It was worth spending time to determine
the best title. He suggested the City review attempts to describe the
qualitative factors that go into the direction they want to nurture for
businesses. For example the City valued innovation, revenue generation,
and diversity of business. There could be some alignment between the
values of the community and those of the business. For example Palo
Alto would not likely want to be known as the “home to big tobacco”. He
stated the policy should not be prescriptive or intended to prohibit
businesses. Palo Alto had one of the highest retail revenues per-capita in
the region. The “big box” Palo Alto stores, in Stanford and stores such as
Apple downtown may not serve the day-to-day needs of the community
as well as they serve the revenue generating need. He said they should
articulate the intention to fuse economic and sustainability goals. He
suggested Staff use a stronger mission statement, than “Palo Alto’s
Economic Development Team is dedicated to sustaining Palo Alto’s
economic growth and stability by understanding the needs and issues
facing business, and partnering with the community and within the
organization to proactively engage in solutions.” He suggested they use
the following verbiage from page three of the Staff Report: “Working
together, we will better leverage our resources to keep Palo Alto as a
center for innovation, while maintaining a strong, vibrant, and attractive
economy. We will continue to make our City one of the most desirable
places to live and work not only in the Bay Area, but in the entire
country.” He discussed the mix of restaurants to retail stating that 20
years ago an influx of restaurants saved downtown. He suggested they
need to evaluate the balance of restaurants per block. He commented on
the sequence of the guiding principles listed in the Staff Report. The
Comprehensive Plan was referenced in the addendum and should be used
as an overriding policy. He said the purpose of the economic
development went beyond driving revenue and needed to be addressed
more prevalently in the Staff Report. He referred to the role business
centers played in the Comprehensive Plan. He discussed the need for a
business directory in order to help provide data for the plan to proceed.
P&S 3-8-11.doc 4
Chair Price said that she was concerned that there were no foundational
documents to grow from. She discussed having a vision for the guiding
principles, community character, and revenue generation. The plan
should be implemented in phases. Periodic progress updates from Staff
would be very important. She suggested performing arts activities bring
people to neighboring communities and could provide the same benefits
to Palo Alto. She suggested that a benchmarking process should be
introduced to provide a checkpoint for determining successes or
challenges. She suggested Staff should explore how the City could
benefit from internet purchasing. She discussed exploring methods to
improve business-to-business transactions through City policy. She
asked if there would be periodic informational reports to the Council.
Mr. Fehrenbach said there would be reports at least yearly. He
suggested there would be many opportunities to update the Council on
successes and potential issues.
Chair Price asked what Staff Members comprised the Economic
Development Team.
Mr. Fehrenbach said it was him and Steven Emslie worked closely with
him. He felt that Staff across the departments thought regularly about
economic development and were involved in the process.
Mr. Keene said there were also other people that held roles in the
process, but it was small team.
Chair Price discussed the issue of a test bed concept mentioned in the
Mayors State of the City Address, and Public-Private Partnerships. There
were economic components to all of concepts and they could be included
in the Economic Development Plan. She suggested using learning’s from
other City’s.
Council Member Holman agreed with Council Member Burt’s comments
regarding the order of the Guiding Principles. The Mission Statement
should be the language indicated by Council Member Burt as well. The
Executive Summary was a bit disconnected as it did not include a
purpose. She discussed item 2a on page 10 of the Staff Report stating
that Staff listed three tactical marketing collateral pieces for CPA Ed. She
suggested that Staff should not call out such a specific number so early in
the process. She discussed the last promotion for Palo Alto businesses
released by the City stating that it was not effective. She discussed the
P&S 3-8-11.doc 5
entities the City was planning on partnering with. She wanted to know
how Staff was planning on working with the businesses that create the
flavor of Palo Alto. She asked how to reach businesses that were not part
of formal organizations such as the Chamber of Commerce.
Mr. Fehrenbach said that business in Downtown and on California Avenue
are all members of their organizations by default. For Downtown Staff
was considering a Block Captain model to encourage communication and
foster engagement. He acknowledged there was much work to do. He
said there were opportunities to work with interns and partners to help
the program process.
Council Member Holman asked about Destination Palo Alto.
Mr. Fehrenbach said the Tourism Business Improvement District has been
formed and Destination Palo Alto blended into it. It was a relationship
that the City needed to foster to leverage resources.
Council Member Holman asked if Mr. Fehrenbach had the ability to reach
out to everyone.
Mr. Fehrenbach said that was why the document before the Committee
was so important to him it helped him formalize his objectives and
understand Council direction.
Mr. Keene said there was the intent of the capacity and yet there was the
reality of the span.
Chair Price said knowing the current situation was a key piece as well.
Council Member Holman spoke about signage issues throughout the City;
illegal sandwich boards were everywhere and degraded the shopping
experience. Code Enforcement needed to address the situation. She
suggested the City should allow blade signs in front of businesses. She
said too much of one type of retail, such as restaurants, displaces a good
mix of businesses and disrupts parking. She stated that she was not
opposed to development but encouraged a balanced approach to
encourage local businesses to thrive.
Council Member Burt suggested caution regarding reviewing other Cities
practices as that was not an effective method of discovering innovation.
He said the Executive Summary should be rewritten. It should be a
summary of the content of the body not an overriding statement. He
P&S 3-8-11.doc 6
said this was a great foundation, something that had never been
completed before.
Mr. Keene asked the Committee to forward any edits to Staff. He
suggested Staff and Council remember the assets they had, and the
healthy design of the City.
Chair Price asked Staff what the next steps would be.
Mr. Fehrenbach said he would like to go to the Finance Committee next,
perhaps the Utilities Advisory Commission (UAC) after that as there were
economic impact to Utilities.
Chair Price said her preference would be to give Staff time to organize
the data.
Council Member Burt said the UAC would not be the best forum as they
were very focused on their core responsibility.
Chair Price suggested the Committee work with Staff to find a date to
report progress to the Committee.
Council Member Holman said she wasn’t sure if Staff should go to te
Finance Committee without bringing the changes suggested tonight back
to the Policy & Services Committee.
2. Final Council Procedures and Protocols
Council Member Holman said that she was directed to work with Staff on
some language and that was not completed. She distributed copies of a
draft for the Committee, Staff, and the Public.
Donna Grider City Clerk reviewed the items that were before the
Committee. One item before was the structure of Study Sessions which
the Interim City Attorney would review later. Submittal of materials
directly to Council was also agendized. The City Attorney reviewed the
item and determined it would not need to be included in the Procedures
and Protocols because it is covered under Late Submittal of
Correspondence which states that items delivered to Council Members
homes should be brought to the attention of the City Clerk. The City
Attorney had drafted some language covering the Policy and Services
Committee Role, Purpose, and Work Planning which would also be
covered later in the evening. Staff had included in the report a copy of
06/14/2011 14
Committee subject to Staff coming back with recommendations with regard to
what non-city use can be made, if any, of the hardware and software.
Council Member Price stated her thought was the Committee wanted to move
the recommendation forward and then the other piece would be resolved and her
understanding now was they were coupled as one.
Mr. Keene stated that it would be better to complete it in Committee before
presenting it to Council.
Council Member Holman stated there was the Amendment regarding the other
policy.
Mr. Keene stated yes, the Amendment was to have the City Attorney review the
policy language on transparency.
MOTION PASSED: 4-0
2. Review and Recommendation by the Policy & Services Committee on the
Economic Strategic Plan Update
Manager of Economic Development and Redevelopment, Thomas Fehrenbach
presented an updated Draft Plan. He stated that with the changes he was trying
to incorporate the Plan’s goals into the language of the document. He reiterated
that the theme for this Plan was to highlight his team’s dedication to being
proactive, fostering innovation, cooperating with departments and promoting
diversity.
Council Member Klein stated the Strategic Plan was a good start but needed
more work. He discussed the economic development strategy related to pursuing
innovations stating those types of businesses did not produce revenue whereas
hotels produced both revenue and sales tax. He asked where the Economic
Development Staff was spending their time. He appreciated that Palo Alto was a
City of Innovation although he noted there would be a larger budget deficit if the
Stanford Shopping Center was converted into something innovative. He stated
he the strategy should begin with determining the difference between the brand
of Palo Alto and the City of Innovation.
City Manager, James Keene stated concerns that the City had antiquated
revenue structures that were locked in place and disconnected from the current
economy. He said it could be difficult at times to adapt.
06/14/2011 15
Council Member Klein stated they should have a discussion about whether or not
more lobbying should be taking place.
Mr. Keene stated that there were restrictions on the revenue sources which
limited their ability to increase the lobbying efforts. He stated that in a place as
dynamic as Silicon Valley Palo Alto needed to be a community that adapted and
changed. He stated there should be a discussion regarding Staffing resources.
Council Member Burt stated that he thought the Plan focused on businesses that
generated revenue for the City. At the same time it acknowledged the in
businesses that did not generate as much business. He discussed the Utility
User’s Tax that generated revenue from these types of businesses. He stated
that there were many businesses that do not contribute significantly financially
to the City. Most cities had a business license tax. He suggested that Palo Alto
could have a more moderate business license tax than previously proposed. He
mentioned that the overall economic vitality as a City versus other cities was
related to Palo Alto being acknowledged as an innovation center. Companies pay
a high premium for office space in Palo Alto. Even with high rents, the City has
has the lowest vacancy rate. He commented on the City’s community values, it
was a very pleasant place to live and the community valued the vitality of the
community.
Council Member Klein asked where efforts should be put.
Council Member Burt stated that the focus is on understanding and meeting the
needs of taxed revenue generating companies.
Council Member Klein stated there was nothing in the Plan that discussed where
Staff time should be spent. He voiced concerns regarding focusing on time put
into projects and how much income it produces for the City.
Council Member Burt asked if they were trying to be prescriptive. His preference
would be to have this as a general policy and plan. He felt that this should be a
document that reflected priorities but did not attempt to get prescriptive.
Council Member Holman stated that she felt that the document had greatly
improved over the last version. She mentioned that she would like to see the
Plan collapsed into fewer pages. She asked how the business directory was
being used and for an update regarding the top 25 tax generators. She
mentioned that she did not see recognition of the fabric that was Palo Alto, which
had been part of previous discussions but was not in this Plan. She asked what
and who the Land Use Committee was and said that there was already a
Planning and Transportation Commission that could be utilized.
06/14/2011 16
Mr. Keene stated that the Land Use Committee was an internal committee that
had different Staff who met routinely, they were a problem solving and strategy
team on the Staff side.
Council Member Holman asked what the purpose was and what some of the
outcomes were.
Mr. Keene stated the committee focused on communication, strategy, and
planning around issues.
Mr. Fehrenbach explained that before bringing an issue such as for example a
digital billboard on Highway 101, there was much collaboration that took place
across the organization.
Council Member Holman asked if outcomes of that Land Use Committee would go
to the Planning Commission.
Council Member Klein stated that sometimes things could be solved at the Staff
level.
Council Member Holman stated that it was not just public properties but private
and emerging projects.
Mr. Fehrenbach agreed and gave an example of a building under construction on
University Avenue and information sharing.
Council Member Holman stated that local businesses were interested in parking,
clean streets, events, and signage. She mentioned there should also be a
consistent theme to attract shoppers.
Mr. Fehrenbach stated that it was vitally important that there was a strong
partnership with the different business associations. He mentioned that a goal of
his was to work on marketing collateral to target different types of businesses.
He mentioned the City needed to be more proactive in attracting businesses and
getting businesses to expand.
Council Member Klein stated that a significant number of people come to Palo
Alto because of the schools and there was no mention of the School District in
the Plan.
Mr. Fehrenbach stated on page two of the Strategic Plan the Palo Alto Unified
School District (PAUSD) was mentioned but could be expanded.
06/14/2011 17
Council Member Klein stated his thought was as a result of the Stanford
University Medical Center (SUMC) the City would start to see more medical start
ups over the next 10 to 20 years. He asked what the City should be doing to get
ahead of the curve. He stated it was not correct to say a significant portion of
Palo Alto’s Utilities User’s Tax was passed through the PAUSD due to a grievance
from the 1980’s. He further stated that it was illegal and would get the City in
trouble.
Council Member Price stated that it would be difficult to have a thoughtful policy
discussion at this stage because the vitality of economic development and the
goal to be innovative requires that the City have an extensive knowledge base.
She appreciated the many action items on the work plan, but she did not see a
relationship between the strategic objectives and some of the policy principles
and how they defined the work plan. She asked what the priorities were and
asked whether it would be better to be more focused on defining the goals. She
stated that she did not have a clear sense of priorities.
Council Member Burt stated that the previous feedback moved this in the
direction of differentiating between overall economic vitality and targeted focus.
He stated that it needed to be clarified which team owned the plan. He stated
that the Plan needed to be shortened. He felt there needed to be an additional
evaluation of how the Comprehensive Plan aligned with the strategic objectives.
He stated it would be useful to have a table showing how each plan fed into the
other. He mentioned there was a trend toward life science companies. He
mentioned a medical center in Cleveland where the city recently built two new
hotels specifically for medical center visitors and medical conferences. He felt it
was a mistake in the Stanford development to link the hotel to the shopping
center rather than to the hospitals. He felt marketing hotels should be a strong
strategic focus.
Council Member Holman concurred with Council Member Burt’s comments
regarding the Comprehensive Plan goals. She felt policies were missing and
needed to be addressed. She had a procedure question regarding the bottom of
page 1 of the Staff Report where it stated; this was going to Finance Committee
and then going to the City Council in September. She stated that with the
Stanford Development Agreement they were asked to make a Motion to
recommend and she had thought that Finance had also been asked the same.
Mr. Keene stated he had asked the City Clerk to confer with the City Attorney for
clarification and relay the information to both Committees.
Council Member Klein felt it was appropriate to have an addendum to the City
06/14/2011 18
Comprehensive Plan goals to update them and modernize them as they were
outdated.
Council Member Holman stated there should be additional goals although most
did apply.
Council Member Klein stated the information was accurate, but there was no
specific detailed direction.
Council Member Burt stated the goals could be changed without revisiting the
underlying policies.
Council Member Klein the direction the Economic Development Manager was
moving in should match the Comprehensive Plan update.
Council Member Burt stated that the Comprehensive Plan Update direction by
Council was restrictive in terms of which aspects of the Comprehensive Plan
could be reconsidered, so it had to be revisited.
Mr. Keene stated the Comprehensive Plan was the vehicle for clarifying what the
City’s values were. He stated the economic focus was business attraction and
business retention and that the focus needed to be on revenue but also creating
jobs to have a vibrant economy.
Council Member Price asked if they had the ability to deploy limited resources to
make economic achievements and be seen as an innovative community. She
asked how they were positioning themselves for opportunity in the changing
economy through the twenty-first century.
Council Member Burt asked whose plan this was so they could determine if it
needed to come back to this Committee.
Mr. Keene mentioned the effort around having a vital business sector in the
economy that was not directly generating revenues for the City. He stated they
needed revenue growth in the City and there needed to be a specific practical
directive from the Council. He stated he would be against a Comprehensive Plan
discussion.
Council Member Price asked if there could be a focused spot analysis of strength,
weakness, opportunity, and threat that related to the strategic objectives and to
all the parts of the work plan to shape it better.
Council Member Klein asked if this was an internal document between the City
06/14/2011 19
Manager and a Staff person or a strategic plan for the City.
Mr. Fehrenbach stated he leaned more towards it being a City Plan. He felt if it
was a City Plan then he had the buy-in from the Council as far as the work he
was trying to do and the broader context of what they were shaping for the
direction of the City’s economic development.
Council Member Burt suggested that the work plan be divided by internal to Staff
and the other as to what was City. He stated that when they looked at
businesses that were not business to business sales tax generators, they
contribute by driving business for the transit occupancy tax to the hotels. He
mentioned that there were indirect revenue generators such as the relationship
with the Utility User’s Tax; property taxes were impacted by the demand side
and over time increased the valuation; and retail sales were affected by the
business community.
Mr. Keene stated that there was a need to align and focus Staff to make the best
use of resources available. He stated they would have some discussions about
what the strategic direction was they needed to have and then come back to
Policy and Services.
II. Adjournment
ADJOURNMENT: Meeting adjourned at 9:34 p.m.
10-18-11 P&S 5
2. Economic Development Policy and Staff Action Plan
Economic Development Manager, Thomas Fehrenbach said Staff had reviewed
the City’s overall perspective on economic development. He clarified the goal
was to focus on the role of the Economic Development Manager and the role of
economic development in the City. Staff had put together a straightforward
action plan based on the Economic Development Policy which they presented to
the Policy & Services Committee for review and recommendation of approval to
the full Council.
Council Member Klein addressed concerns with the dichotomy of the position of
Economic Development Manager. While Palo Alto’s brand was high tech
innovation, it did not produce sufficient tax revenue to maintain a City. There
needed to be time spent soliciting retail stores, hotels, and other revenue
generators the City was dependant upon to function financially. He felt the
language in the policy needed to be clearer with respect to the duality of the
position. There was a bridge with the appropriate verbiage such as the
innovative companies provide the base which attracts the hotels, shopping
centers, and restaurants. The Staff Report had elements lacking from the
background information as to what attracted businesses such as the fact that
Palo Alto is a highly educated and diverse community adjacent to Stanford
University. He stated the term leafy, when referring to the affluent areas, had
become an insult. He requested the term be removed and replaced with another
adjective before tree canopy. He did not understand the context of the language
of the last paragraph on the first page of the draft Economic Development Policy
where it read: The growing divide between economic growth, the City’s tax base,
and state and federal fiscal woes continues to hold down revenue to support the
delivery of services and City infrastructure.
Mr. Fehrenbach explained the language was his effort at describing the
dichotomy previously mentioned. He offered to revise the sentence to make a
clearer statement.
Council Member Klein said the Guiding Principles on page 2, item number 1 limits
the revenue to sales tax. He did not feel there should be a limit placed on the
type of revenue generated. In item number 3 there was reference to Palo Alto’s
value proposition; he felt the phrase should be a part of the Guiding Principles.
He mentioned there was no discussion of healthcare throughout the document;
although, it was previously suggested by the Policy & Services Committee with
the Stanford Hospital expansion there should be healthcare companies
encouraged to come to Palo Alto.
10-18-11 P&S 6
Council Member Holman noted there was no mention of the weather within the
draft Economic Development Policy. She felt there needed to be statistics
mentioned in the document of the open space, parks, City population, number of
trees, nationally registered districts, and the percentage of residents with
graduate degrees. She stated the missing information identified what the
community was and what made the community attractive to businesses. She
appreciated the improvements made to the document since the previous draft;
although she felt it was not complete. She felt an element lacking in the
document was the reference to the people living and doing business in the City
and the relationship to the services provided. She had concerns with some
terms used in the document that were unfamiliar to her and possibly unfamiliar
to the readers such as digital billboards, auto mall, and the SCIP program.
Council Member Burt asked what Staff meant by lot development and SCIP
program on page 2 of the draft Economic Development Action Plan.
Mr. Fehrenbach explained lot development was taking City owned parking lots
and exploring development options and the SCIP program was a financing
mechanism for Impact Fees for developers where the City received a small
amount of revenues through the brokering of the fees with no risk to the City; it
was a State wide Community Infrastructure Program (SCIP).
Council Member Burt suggested adding verbiage to clarify both of those topics.
Under Staff objectives there was a reference to new revenue streams including
innovative uses for under-utilized City-owned property. He asked if the list of
elements was intended to be on City-owned and non-City-owned property.
Mr. Fehrenbach confirmed that was correct. The Economic Development Manager
could act in a role that would assist in finding sites to build on and progressing
the development of new hotels.
Council Member Burt appreciated the description of hotels in the plural and he
felt that should be reflected. There were underappreciated trends occurring in
the community and as with many communities the hotel development was
interrupted by the recession. Hotels had the highest land use revenue with
extremely low peak hour trip generators.
Chair Price expressed appreciation for the detail involved in the document and
how the suggested changes had been incorporated. Both the Staff action plan
and Staff objectives were underlining projects the Staff wanted to undertake.
She asked if Staff was suggesting a priority.
10-18-11 P&S 7
Mr. Fehrenbach stated no, he was not suggesting an order of importance. The
items were in placed in order of highest revenue generating project.
Chair Price said from a reader’s perspective it was difficult to determine which
areas would receive a higher priority. She recommended placing them in an
order to indicate priority. She noted it was not clear whether the reader or
Council should assume as a result of the work in the economic development
action plan there would be development of additional policies to implement the
goals and objectives of the plan. Nor was it clear what products or outcomes
would be produced in relation to the action plan. With respect to the draft
economic development action plan on page 3 section F: Increase staff
awareness of Council’s strategic economic goals, she felt it should be to increase
the community, Staff and Council awareness.
Council Member Klein said there needed to be a consistent vocabulary; a
distinction between the small and large businesses and commercial businesses
would be helpful. He suggested the following topics be removed from the list of
Guiding Principles; number 6, number 7, and number 8. He recommended
adding some form of night time entertainment for those guests staying in all of
the hotels being developed.
Mr. Fehrenbach stated the Guiding Principles were intended to be the City’s
guiding principles, not just that of the Economic Development Manager.
Council Member Holman had a concern with some of the Guiding Principles as a
list of Staff objectives because they were City driven policy and not Staff
directives. She asked for clarification on the additional numbers in brackets at
the end of the section descriptions.
Mr. Fehrenbach said the numbers were in correlation to main Guiding Principles
of the City. He agreed to alter the numbering system so there was a clearer
understanding of their purpose.
MOTION: Council Member Holman moved, seconded by Council Member Klein
for the Policy and Services Committee to request that Staff incorporate
comments from the Committee Members and return to Policy and Services
Committee for further review of the Economic Development Plan.
Council Member Holman asked the expected timeframe for the item to return.
Assistant Director of Administrative Services, Rob Braulik said it could return for
the November 8, 2011 meeting although currently the items agendized were 1)
10-18-11 P&S 8
the Magical Bridge update, 2) Human Habitation in Vehicles update, 3) Project
Safety Net update, 4) Utilities Emerging Technology, and 5) Report from Staff on
the Implementation and Timing of Changes from the Elimination of Staffing
projected for that meeting. Based on the information there would be a
suggestion for a second meeting during the month of November to bring back
the Economic Development Plan.
Council Member Burt suggested not holding the meeting on November 8th
because of the election.
Mr. Braulik proposed working with the City Clerk’s office to select other dates for
the regular and special meeting.
MOTION PASSED 4-0.
3. Recommendation regarding Electric Vehicle (EV) Infrastructure Policy.
Debra Van Duynhoven, Assistant to the City Manager for Sustainability,
explained that the Electric Vehicle Infrastructure Policy was a multi-department
effort between the Utilities Department, the Public Works Department, the
Planning and Transportation Department, the Development Center, and the City
Manager’s Office. The intention of the Policy was to define a common goal and
strategy for Staff and to provide a clear statement to the public of the City’s
support for an electric vehicle (EV) infrastructure. The key motivations behind
the development of the Policy were: 1) Projected demand: Experts had
anticipated there would be between 3,000 and 10,000 EVs in Palo Alto by 2020,
2) Climate Protection Plan: If projections were accurate, the City’s commute
emissions could be reduced by between 4 and 13 percent, and the community-
wide overall emissions could be reduced by between 1.5 and 5 percent, 3)
Industry advancements: A new generation of EVs and EV charging stations were
emerging. By 2012 there would be approximately 20 different brands of EVs and
plug-in hybrid EVs, 4) Public charging infrastructure, 5) Permits for EV charger
installations: The City currently received approximately 20 permit applications
per month, a number which increased on a monthly basis, 6) Impact on the
City’s electric distribution system: the Utilities Department had determined that
the impact to the electrical distribution system would be minimal in the early
years of implementation, 7) Government subsidies: The five most recently
installed EV charger units had been funded through government subsidies from
the Department of Energy and the Bay Area Air Quality Management District,
and 8) Economic development. She presented a map of the five recently installed
EV chargers, which had the capability to accept credit card payments. Current
charging station locations within Palo Alto included Stanford Shopping Center,
11/29/11 1
POLICY AND SERVICES COMMITTEE
Regular Meeting
November 29, 2011
Roll Call
Chairperson Price called the meeting to order at 7:00 p.m. in the Council Conference
Room, 250 Hamilton Avenue, Palo Alto, California.
Present: Burt, Klein, Holman, Price (Chair)
Absent:
Oral Communications
None
Agenda Items
1. Economic Development Policy and Staff Action Plan
Thomas Faherenbach Economic Development Manager, reviewed the Economic
Development Policy. He stated that Staff had incorporated the changes the Committee
requested. He asked the Committee to recommend the Council adopt the Economic
Development Policy and to provide comments on the Staff Action Plan as it related to
the Policy.
Council Member Klein stated he had many changes on the Background portion of the
Staff Plan as he felt it didn't flow. He approved of the Policy Statement and the
Guiding Principles except Item 4. He said he would not be able to vote for it as it was.
James Keene City Manager said Staff would be happy to collect marked up copies from
Committee Members to reconcile changes.
Chair Price stated reconciling changes would be appropriate.
11/29/11 2
Council Member Holman said she would write up her changes and provide them to
Staff.
Chair Price stated she felt it would be more efficient to have Staff make changes rather
than debate each change in the meeting.
Council Member Klein said the Policy and Plan were substantively appropriate, but the
grammar needed work.
Mr. Keene stated he shared the lead responsibility with Mr. Faherenbach for drafting
the proposed Policy. He felt the Policy formed the foundation for an action plan.
Chair Price asked for comments on Attachment One.
Council Member Burt stated he had concerns similar to Council Member Klein's
regarding the Background section. He asked what the purpose of the Background
section was. He said it was not entirely background but included overriding
statements. He reviewed examples of his concerns with the Background section. He
asked if the intention of the Guiding Principles was to describe how the Council will
function or how the Council will function with the private sector.
Council Member Klein agreed stating it should be a guide to economic development
efforts.
Mr. Keene agreed.
Council Member Burt said even though the dedicated Staff was just one person,
various departments had some collaborative effort in the process. He felt this needed
to be explained better. He said ensuring stability was an objective but not within the
City’s power. He stated the City complements the private and academic sectors in
advancing creativity and innovation, but questioned if the City was capable of
advancing these goals.
Mr. Keene requested specific suggestions on language to be used. He said there were
various ideas presented at the previous meeting, but he was uncertain as to the
Council's dedication to these ideas.
Council Member Burt stated the process should be for the Committee Members to
actually participate in the project rather than simply approving or disapproving the
content. He suggested Staff provide drafts further in advance of meetings so that
Committee Members could provide feedback to the Staff prior to meetings, and then at
11/29/11 3
the meeting Staff would have drafts closer to the finished product.
Council Member Holman felt the report focused on innovation and innovative
companies, which are important but are not exclusive. She felt there was not a good
reference to providing the Goods and Services that also support the community and
should be mentioned in the report.
Mr. Keene suggested the word "support" had a different meaning than grow. He said
support could be applied to supporting all of the existing businesses.
Council Member Holman said some businesses draw people but don’t generate much
income on their own and that was not addressed in the report. She stated the list of
Guiding Principles had not changed much. She stated other communities were
discussing how to economically support existing businesses in order to change their
model to address these issues in the short term. Regarding attachment two, she
asked if digital boards, a Stanford shopping center expansion and an auto mall were of
interest for discussion. She also questioned the meaning of development of existing
parking lots in terms of verbiage.
Chair Price stated the Committee was commenting on the Economic Development
Policy, Staff Action Plan, and attachments 1A and 1B.
Council Member Burt said under Staff Action Plan Staff would evaluate versus act.
Mr. Faherenbach agreed.
Council Member Holman said evaluation takes time. She was unsure if the Council
would be interested in Staff exploring digital billboards and auto malls.
Council Member Klein said yes it does but not necessarily those particular ideas. He
felt the Council should not dictate how Staff spends its time as the City Manager has
discretion on that and should report back to Council. He said it was Staff's job to
evaluate ideas and report on them.
Council Member Holman said she was concerned about providing Staff with topics for
investigation such that their time would be better served.
Mr. Keene said the policy was predicated on the primary goal of maintaining the
revenue base and growing it where possible. He recognized there were more
limitations placed on themselves in Palo Alta than other cities. He stated Staff had to
put down something to give the Policy meaning and that Staff wanted to suggest
rather than limit the kinds of revenue to pursue.
11/29/11 4
Council Member Klein said Staff had a tendency to take one Council Member's
comments over listening to the consensus of the entire committee.
Chair Price said this was improving. She stated she too had detailed comments
regarding the Policy and the Staff Action Plan. She felt there was redundancy within
the Guiding Principles and that they were a combination of statements, goals,
methodologies, and strategies. She felt this document had to provide a clear
understanding of the most important principles. She said her initial read on the action
plan was that they needed a priority order to the list. She said she would send her
written comments to Staff. She then mentioned the Council's focus area discussions.
Mr. Keene asked if this related to priorities.
Chair Price felt that was one of the best documents she had seen and that approach
would be helpful here. She thought the Committee needed a better understanding of
what Staff identified as general priority areas as a way to outline a work plan. She
asked when the last Economic Development Policy was adopted and if there was a
component in the Comprehensive Plan. She felt this provided touchstones and set a
framework. She stated she saw some great improvements and expressed her
appreciation.
Council Member Burt said priorities needed to be broken down into what was most
important and what was most immediate. He said the Council should not guide the
specific actions of Staff; however, there were issues that should be addressed. He
discussed historical context and revenue generation being the primary driver in
economic development, with local services being another factor. He also discussed
revenue from sales tax and big-box retail stores in Palo Alto. He thought the
Committee should acknowledge local-serving economic elements which generate
significant revenue. He next discussed the loss of hotels even though the City had
many inherent attractions for hotel stays and the revitalization of hotels through zoning
and marketing efforts. He stated an increase in the hotel tax had not hurt business.
He stated part of the document's purpose was to explain the Council's actions and
plans for the City.
Chair Price requested additional comments on attachments one and two.
Council Member Klein requested that Staff send copies to the Committee Members as a
Word document for editing purposes.
Mr. Keene agreed and asked if the Committee wanted individual markups or group
markups.
11/29/11 5
Council Member Klein asked Staff to compile the Committee Member's comments and
submit them at another meeting.
Chair Price asked if the next meeting would be on December 13, 2011.
Council Member Burt asked if they needed one on the 13th.
Chair Price asked if Staff could have the documents revised for a meeting on the 13th.
Mr. Keene said it depended on how aligned the comments were.
Chair Price stated there was a meeting tentatively scheduled for December 13th. She
stated Staff would send the Committee Members the Staff Plan and the Committee
Members would make their edits then return them to Staff. She asked Staff to set a
deadline for the Committee Members to return edited versions. She asked Staff to
discuss items for the next meeting.
Rob Braulik stated the only item scheduled for the next meeting was the massage
ordinance. He stated items for a future date to be determined were anti-smoking,
human habitation of vehicles and whistle-blower.
Mr. Keene stated the massage ordinance was the only definite item. He suggested
that the 13th would not be a good date as Council Member Klein would not be present.
He also asked if it would be worthwhile to present the revised documents at that time.
Council Member Burt said it would be difficult for him to attend on the 13th.
Chair Price stated her concern about those Committee Members who would be
attending other committee meetings in January.
Mr. Keene suggested it may have been a mistake to bring a document to edit as
opposed to framing a conversation about goals the Council would have. He stated the
way Council Members want to see Palo Alto positioned in and described to the world
was important. He was concerned that there would be a large discussion when
presenting the documents to the full Council.
Chair Price asked if the Economic Development Principles could be embedded in the
retreat.
Mr. Keene suggested a foundation paper from the Committee could be included in
strategic-visioning sessions the Council had asked him to structure.
11/29/11 6
Chair Price said that could be another vehicle in terms of visioning and strategic
discussions.
Council Member Holman asked if Staff liked the idea of putting the Action Plan into a
matrix such as the priorities.
Mr. Keene said it might be too much detail and create complications. He suggested
main themes to generally focus emphasis. He stated Staff had to exercise judgment
daily about their work and the plans were meant to guide work activities.
Chair Price said it seemed there needed to be a simple rationale regarding the purpose
of a cluster of activities. She said this would provide a better understanding of the
structure and priorities.
Council Member Burt stated the individual elements of the Action Plan were principally
Staff-based. He agreed with Mr. Keene's prior comments regarding creating primary
objectives before creating the document. He suggested the Committee needed to
comment on how it might be framed and then an overall set of objectives.
Council Member Klein felt the Committee had backed into consideration of the plan.
He stated the City's reputation was based on technology industries that did not bring in
much revenue. He stated a central part of revenue generation was all types of
businesses which the City did need to develop and improve. He felt it was a mistake to
give the Action Plan to the Council for review. He said it was difficult to strike a
balance among innovative materials which provide the City's identity, the businesses
which provide taxable revenue, and small local businesses so that the Community
could have the Goods and Services it wanted.
Council Member Holman said she saw no reference to a business registry as opposed to
a business license tax. She said there were action items under the priorities but they
were too detailed, too extensive. She asked Staff to comment on a business registry.
Mr. Faherenbach explained there were data-analytical tools available that would allow
Staff to see trends and make assessments. He felt there could be simpler ways to
obtain information regarding trends than a business registry. He suggested Staff could
explore this.
Council Member Holman stated she thought contact with businesses was important.
She thought employing Council Members to visit businesses would help relations with
the business community.
11/29/11 7
Council Member Burt felt it would be more appropriate to add something about a
database.
Mr. Keene agreed the City needed an economic database. He suggested an economic
development principle for Palo Alto should be “first do no harm.”
2. Utilities Advisory Commission Recommendation that the Policy and Services
Committee Recommend that Council Establish the Utilities Emerging Technology
Demonstration Program.
Utilities Advisory Commission Chair, Jon Foster stated that the Utilities Advisory
Commission (UAC) and the City of Palo Alto Utilities Department (CPAU) had been
working together for the past two years to establish a Utilities Emerging Technology
Demonstration Program. The issue was brought forward in late 2009/early 2010
because several emerging energy technology companies viewed Palo Alto as an
innovative place where they could bring and demonstrate new products. Companies
that presented their products to larger utility venues ran into difficulties and sometimes
found it impossible to try to get through bureaucratic barriers. Companies found that
Palo Alto had an interest but the City did not have a program to accommodate their
needs. The Staff brought forward a pilot program that was endorsed by the UAC to
facilitate the incoming applications from technology companies. The program would
start small with limited funds from the City to hire a consultant and to purchase
equipment to help assess the products. The funds could not be used for grants or
loans. The pilot program looked promising and it should generate a large number of
applications. Both Palo Alto and the companies involved could benefit from the new
products and technologies.
Council Member Klein asked why the companies were not paying for the services.
Mr. Foster stated utility companies would volunteer staff time and services and did not
charge the companies. He said it appeared to be the common practice and did not
know why it was done that way.
Council Member Klein stated he had worked with several developing companies that
paid to have their product tested and raised concerns regarding the practice.
Mr. Foster stated that would be an interesting question to ask the Sacramento
Municipal Utility District (SMUD).
Council Member Klein suggested asking companies during the evaluation process if
they planned to pay the City for its services.
Mr. Foster raised concerns that companies may ask for something rigorous in return if